Theory of Constraints

I recently attended a meet-up where one of the presenters spoke about Theory of Constraints. While a lot of us use this term, only a few truly understand it and can put it to good use. Luckily for me, the presenter was one such person and did a great job at explaining it to the audience. As he went along explaining the paradigm to us, I couldn’t help but notice how nicely it fit with the Agile and Lean philosophies. This blog post is about that connection.

But before we go any further, let’s first understand what ToC is. The website for Theory of Constraints Institute describes ToC as a way of identifying and managing bottlenecks that restrict the entire system’s output. It is a set of management tools devised by Dr. Eli Goldratt and introduced in his book “The Goal”.

ToC says that, at any point of time, there is a single constraint throttling the system. Eliminating/ easing this constraint improves the output. You then have to evaluate the entire system again to find out the next constraint. Rinse and repeat.

The above has an interesting corollary. An hour lost on the constraint is an hour lost by the entire system. However, an hour lost on a non-constraint is no loss for the system overall. So when we continue to improve something and still wonder why there is no improvement with the system at large, possibly we are trying to optimise something that is not the constraint choking the bigger system. Yes, we might still end up improving a sub-system but local optimisations do not help the larger scheme of things.

Eli structured the following 5-step process for ongoing improvement:

Image Source: Theory of Constraints Institute

When we get bowled over by methodologies like Agile, Lean, Six-Sigma, etc., we forget that these methodologies primarily help to Elevate the Constraint (Step 4). Some of them might also contribute towards other steps but we still need to perform them.